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Financial Management System Development
To develop and introduce effective Financial Management System in a company/organisation, comprehensive diagnosis and analysis of existing FM systems would be carried out by Core Resources Ltd in the 1st month. The deliverables are segregated in three different phases described as under:
- Diagnosis Phase
- System Development & Implementation Phase
- Feedback & Troubleshooting Phase
Based on the diagnosis and analysis made, a detailed work plan for the whole assignment will be developed in consultation with the Management of the business house/organization and month-wise schedules of the deliverables will be provided. Tentative deliverables for the assignment is stated below in a chronological order.
1.0 DELIVERABLES
1.1 Diagnosis Phase
- Understanding the process
- Comprehensive analysis of existing Finance, Accounts and Audit functions
- SWOT analysis of Finance, Accounts and Audit System
- Review of existing Organogram of Finance, Accounts and Audit
- Job analysis of existing finance staff
- Review of placement of existing staff
- Review of qualifications, experiences, etc, of existing staff
- Review of existing rules and procedures of Finance and Accounts
- Review of existing Monitoring & Reporting System
- Review of existing Management Accounting System
- Review of existing Costing System
- Review of Inventory Management System
- Review of Internal Audit & Control System
- Review of Accounting softwares
- Review of Chart of Accounts
- Review of Record Management System
- Review of Fixed Asset Management System
1.2 Development & Implementation Phase
In the development phase, recommendations will be made and action plan will be developed for overcoming the weaknesses by capitalizing on the strength. Rules, policies, etc, will be developed/revised and implemented based on requirement on the following issues:
1.2.1 Organisational System:
- Develop Manual for Financial Management System
- Assist in developing Strategic, Tactical and Operational plans for the Company
- Revise Organogram of the Company, if necessary
- Revise/develop SOP for Finance, Accounts and Audit Departments
- Revise/develop qualifications, experiences, etcm of existing staff
- Revise/develop job descriptions of existing staff
- Revise/develop workflow of various activities
- Train up executives on developed job descriptions
- Placement of existing executives
- Set-up various wings of Finance Department
1.2.2 Accounting & Record Keeping System:
- Identify Head of Accounts and guidelines to set right of Accounts
- Revise Chart of Accounts, if necessary
- Develop guideline for Cost Centre
- Revise / Develop reconciliation system of Master L/C with BTB L/C and Bank
- Develop guidelines for updating L/C related Accounts
- Revise/develop necessary accounting formats, if necessary
- Introduce monthly Bank and other Reconciliation system
1.2.3 Reporting & Monitoring System:
- Revise/develop Interdepartmental Reporting System
- Revise/develop Financial Reporting System
- Develop internal control system for different wings
- Introduce various analysis and reporting system
- Revise/develop Cost Reporting System
- Revise/develop Financial Ratio analysis
1.2.4 Rules & Procedures:
- Revise/develop various rules and procedures for Finance, Accounts and Audit
- Develop procedures for disbursement, adjustment and reconciliation of Petty Cash, IOU, Advance, et
- Revise/develop checking, verification and approving procedures of bills, etc
- Define authorities and their job responsibilities for recommending and approving documents
- Develop rules for preparation and signing of cheques
- Revise/develop effective Working Capital Management System
- Revise/develop payment procedures
- Develop Fund Management System
- Revise/develop procedures for calculation and disbursement of salary, overtime payment, etc
- Develop system for Income Tax deducted at source (TDS) and related issues
1.2.5 Budget & Budgetary Control:
- Develop strategies for Budgeting System
- Revise/develop guidelines for preparation of Budget
- Assist in preparing Revenue, Capital & Cash Budgets
- Assist in preparing Master and Flexible budgets
- Develop Budget approving procedures
- Develop tools for Budget Analysis
- Develop mechanism for Budgetary control
1.2.6 Cost Accounting & Cost Control System:
- Develop strategies for Costing System
- Develop effective Costing System
- Develop effective cost control mechanism
- Introduce various variance analysis
- Develop tools for calculation of system’s loss
- Develop mechanism for controlling system’s loss
- Develop system for analyaing cost of production, etc
- Introduce transfer pricing to ensure profitability of business units
- Introduce Cost Audit
1.2.7 Inventory Management System:
- Develop strategies for Inventory Management System
- Revise/develop effective Inventory Management System and integrate the same with Accounts
- Develop rules, procedures and frmats (MRR, GRN, Requisition, etc) for Inventory
- Develop Recording Management System for Inventory
- Develop Inventory storage (Piling) and tracking system
- Develop requisition and approving procedure for usage of inventory
- Mechanism for determining EOQ, Re-order Level & Quantity, etc
- Introduce Quality Control System for Inventory
- Assist in developing specifications for various inventory items
- Develop reconciliation system for procurement and consumption of inventory
- Develop tools to identify the mis-usage, pilferage and system’s loss in Inventory
- Prepare guidelines for Safety and Security System of Inventory
1.2.8 Fixed Assets Management System:
- Identify and record Fixed Assets
- Identify and record historical cost
- Identify and record historical cost
- Develop Depreciation Policy
- Integrate Fixed Asset Accounting with mainstream Accounting Treatment
- Prepare guidelines for provisioning fixed assets
1.2.9 Internal Audit and Control:
- Develop Internal Audit Department
- Develop Internal Control System
- Develop SOP for Audit Department
- Prepare Audit Plan
- Develop guidelines for preparation of Audit Report
- Guide Audit team in ensuring budgetary control
1.2.10 Conducting Audit:
- Conduct Management Audit of the Company
- Conducting Physical Inventory
- Do checking and verification of all kinds of transactions along with vouchers and supporting documents
- Reconcile IOU against advances given
- Reconcile Bank Reconciliation Statements
- Verify Fixed Assets physically
- Check Inter-department transactions
- Check and verify system’s loss
- Verify sourcing system of raw and other materials
- Prepare guidelines for making variance and trend analysis
- Prepare guidelines for checking outstanding loans of debtors and creditors
- Produce Audit reports for Management from time to time, as and when required
1.2.11 Conduct Training Courses:
Two types of trainings will be provided:
1. One-to-one training for mentoring the employees about individual SWOT, jobs descriptions and career planning
2. Class room training for concerned employees (10 to 15 nos. in a batch) on the following topics:
- Awareness on newly developed system of Finance, Accounts, Audit, etc
- Awareness on Organisational objectives for Finance executives
- Cost Accounting, Cost Centre, Cost Reporting & Cost Control System
- Working Capital and Fund Management System
- Inventory Management System
- Fixed Assets Management System
- Budget & Controlling Mechanism
- Various rules and procedures for Finance, Accounts and Audit including the following:
- SOP and workflow of Finance, Accounts and Audit Departments
- Procedures for disbursement and reconciliation of Petty Cash, IOU, etc
- Verification and approving procedures of bills payment ,etc
- Authority and job responsibility of executives
- Chart of Accounts
- Master L/C with BTB L/C and Bank
- Necessary accounting formats
- Reporting & Monitoring System
2.3 Feedback & Troubleshooting Phase
Trouble shooting is done on the basis of feedback received from various activities after implementation of the rules, procedures, etc, of the system.
3.0 ASSIGNMENT IMPLEMENTATION PROCESS
- A comprehensive diagnosis and analysis will be conducted under the direct supervision of the Chief Consultant to identify the strength and weaknesses of HRM Management of the organisation, draw the scope of work and develop strategies to solve the existing weaknesses.
- Based on the findings, recommendations will be formulated for the solutions of the findings and meetings will be held with Management for discussing the rationale of the recommendations.
- If the Management agrees, a detailed action plan will be prepared which will have to have the approval of the Management.
- After getting the approval, strategies, rules, policies, tools and techniques will be developed for successful execution of the action plan.
- To make the Human Resources get acquainted with the newly developed system and make them efficient in handling the same, training modules and materials will be developed and the following trainings will be conducted for the employees:
- On-the-job training, one-to-one training on the system developed
- Theoretical or classroom training on system developed
- Special trainings on various issues
- After completion of on-the-job and theoretical trainings, implementation of newly developed system will begin.
- After implementation, feedback will be noted and troubles created in implementing the system will be addressed accordingly.
4.0 BENEFITS FROM THE SERVICE
The business/organization will achieve the following goals after successfull implementation of CRL’s assignment to overcome the organizational weaknesses:
- Introduction and practice of a corporate system and culture leading to establishment of organisational discipline thereby saving valuable Management time for concentrating more on policy matters and critical issues;
- Development and implementation of effective strategic and tactical operational plans ensuring business growth;
- Streamlining of Human Resource, Finance & Accounts, Administration and other operating systems of the organisation leading to enhanced employee/staff skill, capacity and effectiveness;
- Introduction and practice of effective HR policy and procedures ensuring improved HR performance;
- Establishment of internal control through development of an effective organogram and appropriate recruitment system ensuring the establishment of a proper chain of command;
- Creation of suitable environment for efficient team building leading towards enhanced team performance;
- Improvement of manpower efficiency and productivity ensuring maximum utilization of resources and lower man-hour cost;
- Reduction of employee grievances and dissatisfaction due to establishment of good policies and practices resulting in reduction of turn-over rate ensuring long-term benefits for the organisation;